Salesforce Shares Lose 6% Value After Revealing Q3 Earnings And Departure Of CEO

Salesforce Shares Lose 6% Value After Revealing Q3 Earnings And Departure Of CEO

On Wednesday, the officials at Salesforce posted the earnings they had generated in the third quarter of 2022.

The executives had good news for the investors and other stakeholders as they shared the earnings for the third quarter. They revealed that they had successfully beaten the expectations set by the analysts.

Apart from sharing a promising update about the earnings for the third quarter, the Salesforce executives also had a bomb to drop on the stakeholders.

The executives revealed that Bret Taylor, the co-CEO of Salesforce will no longer be part of the company. They have confirmed that Taylor will be stepping down as the co-CEO of the software company.

This is a major setback for the company, which also raised many concerns among the investors. The panic among the investors could be seen with the Wednesday stock price performance of Salesforce.

Following the announcement, the share prices for Salesforce have recorded a 5% dip in the Wednesday trading session.

Salesforce officials have also confirmed that Marc Benioff, the co-founder and the current CEO of Salesforce will be the only person leading the company after Taylor’s departure.

Following the announcement, Salesforce’s shares have shed more than 6% of their stock value. The drop was reportedly witnessed during the extended trading session.

Earnings by Salesforce for Q3

Although Salesforce has recorded a dip, there is a high possibility that the share prices may soon pick up.

Another thing to mention here is that Taylor’s departure could have been much more disastrous for Salesforce’s share prices if only the Q3 earnings were not above expectations.

The executives shared what estimations the Refinitiv analysts had shared for the third quarter of 2022.

The earnings per share that the analysts expected for the third quarter were $1.21.

Salesforce confirmed that they successfully generated earnings of $1.40 for the same quarter, 19 cents more than the estimations. The company has generated 15.07% more earnings that the expected figure.

The Salesforce officials confirmed that the revenue expectations that came from the Refinitiv analysts were $7.82 billion. However, their revenue was higher than the estimation, as they generated $7.84 billion.

The company has generated $0.02 billion more than the estimation, which translates to 0.26% higher revenue than expected.

Fourth Fiscal Quarter Expectations

The officials also shared the fourth fiscal quarter earnings expectations. They revealed that for the fourth fiscal quarter, they are hoping to hit a revenue between $7.9 billion and $8.03 billion.

The Q4 revenue expectation is in line with the Refinitiv expectations that are set to $8.02 billion.

However, Salesforce officials have reminded the investors that the forex market is currently very volatile. The constant fluctuation in the forex market can mess up with their sales revenue.

They expect that in the fourth fiscal quarter, they may take a hit of $900 million to their sales, and that would happen due to the forex fluctuations.

YoY Growth of Salesforce

Salesforce has also witnessed an increase in its revenue compared to the same quarter of 2021. A 14% year-over-year increase has been recorded in Salesforce’s revenue, which is quite an achievement.

Despite earning higher sales and revenues in recent quarters, the company is playing it safe when it comes to estimating the yearly figures.

In the past quarter, the company had reportedly lowered its expectations for earnings and revenue for the entire year.

Although it was expected that the company would increase those estimations, it has decided to stick with those figures.

The executives cited the current economic condition that has forced them to make such a decision. They have decided to stick with the figures they communicated in the past quarter.

The company has recently changed the way it operates in the market. Salesforce reportedly spent over $1.7 billion for the purpose of repurchasing its shares in the same quarter.